One way to adapt is to cut costs by automating as many of the
repetitive processes as you can.

The challenge is balancing the automation with reliable fail
safes that work when no human is about to check every trade.

At Goldman Sachs, that task falls to Damian Sutcliffe, the bank's
EMEA tech head and global chief of operations technology.

He sat down with Business Insider to discuss how the bank is
using tech to navigate an uncertain financial world.

Business Insider: What's the main project you're working
on?

Damian Sutcliffe: Probably the predominant thing
we're focused on is providing scale and automation for the firm
more broadly. That goes into the way trades are processed, the
way they're priced – that's increasingly being done
algorithmically – all the way through to the client interactions,
from the way we collect their allocations, to moving money and
assets, to how we report to regulators.

In the current market conditions, there have been fewer and fewer
banks that have been able to fund loss-leading businesses. So at
some point you get to a moment where the pressure is too much for
some places that haven't been able to achieve the critical mass
and that scale and then they pull out of that business and then
that does open up market share.

Damian Sutcliffe, the bank's EMEA tech head and global
chief of operations technology, spoke to Business
Insider.Goldman
Sachs

But then market share is only attractive if every unit
transaction you're processing is done at a profit. So we see it
as a huge opportunity. You can't apply the old business model to
the new environment and hope to be successful. And where it gets
interesting for us in tech is that our division is central to the
success or failure of our transformation in the new market
conditions.

All of what we're doing needs to be
straight-through-processing to achieve the cost-per-trade on the
expense side. Fewer human touch points, fewer errors that need
humans to resolve, and more of the firm's business being
activated through computer code rather than human brains. The
human brain is not operating the plant, it's designing the plant
that operates itself.

So there's a huge focus on ourselves, all of the processing we
do, what are the humans doing, how can we automate that, how can
we remove the friction from the system.

BI: With fewer humans there's greater efficiency, but
doesn't the system become more fragile with fewer checks and
balances?

DS: There shouldn't be fewer checks and balances
and they may be automated themselves.

But computers are great at being told what to do, they do them
very quickly, repeatedly with high precision. The challenge comes
though that they're not very good at noticing when something's
not right. And because they do it so quickly, it's not one trade
that might go wrong, it's 100,000 processed in the 10 minutes
that went wrong. What comes with that high level of automation is
a huge increase in the inherent operational risk that lives in
technology.

The human brain is not operating the plant, it's designing
the plant that operates itself.

Before it was "is the person in operations doing the right
thing?" Now, it's "is the computer being programmed correctly?"
So we have to get ahead of that, we don't want to fly ahead with
automation and realise the world's blown up. So in parallel we're
focused on the control side.

If you think about a nuclear power plant, you have very few
people in the plant making sure everything is fine, that's
because the checks and balances are all automated probes that sit
on the pipes and rely data back to the control room. So we've got
to have automated kill switches because it's not like you present
the data to someone to and they can research it and take action.
So you have to have something that says "this looks sufficiently
bad, let's pull the plug." And then have people that can research
it and make a decision later on what happened and take action if
it's a big problem.

The other thing we do is complying with the large amount of rule
changes and expectations of perfection around the data we supply
to regulators, which is continuing to accelerate. That has
literally 1,000s of people on the firm working on it. Now it's
clear the regulators are looking.

REUTERS / Brendan
Mcdermid

BI: Is it tough to hire people in tech? It's a competitive
area.

DS: Technology skills are in huge demand across
all industries. While our brand is extremely well recognised for
investment banking and trading jobs, we're not as well known for
tech and engineering opportunities.

If you ask someone in the street "what is Goldman Sachs known
for," they'll say investment banking, or even quite a lot of
other things these days. But very few will say "that's the place
I want to go to because I'm a great engineer."

If you say Google, naturally the engineers want to go there. Once
we find people, we get extremely high acceptance rates. People
like what they see once they've seen it. The challenge is getting
people to come in and take a look.

BI: Finance doesn't appeal to everyone. Is it tough to
spark people's imagination when Google engineers are working on
things like driverless cars?

DS: That's a fair point. If you ask me to
compete on the driverless car front I may struggle. To me one of
the pluses of the financial markets is that it's fast-paced and
that technology is central to it. The complexity of the problems
we're trying to solve and the nature of change of those problems,
on a purely intellectual level, it's incredibly appealing to
smart people.

If you solve them, you will see the impact in people you're
sitting right next to. We don't sit apart from the rest of the
business. Maybe in some of the tech companies, you write some
code, you throw it out there and you don't know if you've made a
difference.

People like what they see once they've seen it. The
challenge is getting people to come in and take a look.

BI: How do you compete on pay with the big tech
companies?

DS: It's a constant challenge. There are a
number of tech firms that have strong revenues and high margins,
while others have high valuations.

Out of campus, in the US the tech firms definitely bid up and are
driving the market upwards. We haven't seen that to the same
extent in the UK. In the US, they're outpaying us at the entry
level.

But it's interesting when you look at people we hire with four or
five years experience from a Google or an Amazon, and you often
don't find there's much difference there. We have a focus on
onward progression of pay, while in other places you might stay
on your entry salary, or thereabouts. At senior levels, I
wouldn't have said we were un-competitive, maybe even more on the
upside.

BI: And what about attracting millennials?

DS: I think it's important we adapt to the
characteristics of the generation we're hiring from. There are a
number of things, such as getting access to mentors and respected
people to help them. I think there's a big focus on giving back
and citizenship. In terms in work/life balance, we're having to
adapt around that. We're about to launch a work from home
initiative, which will have some jobs almost fully from home, and
others two to three days in the office.

With the right equipment from home, people are starting to be
more productive, with no commute time. People are taking about
half of that commute time as extra work time, and the other half
as time to balance out their lives. Money is one aspect of what
drives people contentment, and I think with millennials it's a
smaller piece of the way they make their decisions.